· The Economic Development in Africa Report 2022, of the United Nations Conference on Trade and Development (UNCTAD) has made some significant recommendations for African economies to move forward.
- It has cautioned African countries against their heavy dependence on commodity exports.
The Economic Development in Africa Report 2022, of the United Nations Conference on Trade and Development (UNCTAD) has made some significant recommendations for African economies to move forward. It has cautioned African countries against its heavy dependence on commodity exports. Many African countries it pointed out benefitted from the commodity boom. However, the prices have started cooling off.
UNCTAD noted that 45 of the continent’s 54 countries relied on agricultural, mining and extractive exports which led to “highly volatile revenues” for low-income nations due to the fluctuating nature of the market. The vulnerability is further accentuated by geopolitical factors and developments like the COVID-19 pandemic and the 2008-9 global financial crisis. To avoid such uncertainties, UNCTAD advised the countries to diversify towards higher-value services and boost investments in technology and financial services to help them battle challenges like climate change, future health emergencies, and the food crisis exacerbated by the Ukraine conflict
Though some African countries have taken steps to develop their services sectors, it remained largely confined to transport and tourism, that account for two-thirds of service exports across the continent. The report noted that Information technology (IT) and financial services accounted for just 20% of Africa’s services exports. The report underlines the importance of the services sector … particularly enterprises that are high-skilled and high-knowledge, such as fintech, health care technology, logistics technology as well as agriculture and energy technology.
Paul Akiwomi, UNCTAD’s director for the Division for Africa, Least Developed Countries and Special Programs, cited the successful example of Mauritius. Its diversification from an agricultural economy to financial services and fintech attracted substantial investments from India and the United States. Similarly, he also noted how Nigeria and Kenya have become major hubs for fintech and health tech start-ups respectively. The financing of SMEs that are innovative and technology-driven is a big challenge, he said in Africa, as the continent lacked the culture of lending money for an idea. UNCTAD’s report noted that Africa’s 50 million SMEs have an unmet financing need of $416 billion (€415 billion) every year.
The UNCTAD report was hopeful about the role of African Continental Free Trade (AfCTA) to open markets and boost intra-African trade and push new sectors.
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